Kalshi has permanently banned former U.S. Representative George Santos and imposed a $71,356 penalty after finding that he manipulated an attendance market to earn $17,839.57.
Santos Traded Outcome He Could Control
Kalshi's Aug. 28 disciplinary notice said Santos placed large trades between Feb. 2 and Feb. 25 in contracts that paid according to whether he attended President Donald Trump's 2026 State of the Union address. As the person whose attendance determined the contracts' result, Santos had direct influence over the event. Kalshi Rule 5.17(z) prohibits members from trading contracts when they can affect the underlying outcome. Despite the restriction, Santos bought and sold contracts tied solely to his own attendance.
Social Media Posts Moved Contract Prices
During the trading period, Santos published several statements about his travel and attendance plans. Kalshi said some posts were false or misleading and were made to move prices before he purchased or sold contracts. After asking X followers whether he should wear a serious or bedazzled suit, the "Yes" contract rose from about $0.15 to $0.70. Santos then sold the full position for a $3,448.43 profit. Later, after posting that bad weather had made his trip difficult, the "Yes" price fell from $0.63 to $0.28. Santos then bought "No" contracts before the address, generating $14,390.57 in profit.
Separate CFTC Penalties
A separate CFTC order issued on July 31 imposed different payment amounts and a shorter restriction. The regulator ordered Santos to disgorge $17,569.98, pay a $17,500 civil penalty, and stop trading on any CFTC-registered entity for three years. Santos consented without admitting or denying the findings. The CFTC classified the State of the Union event contracts as swaps under the Commodity Exchange Act.
Prediction Markets Add Controls After Insider Cases
The Santos case follows other insider trading enforcement actions in prediction markets. In February, Kalshi imposed a $20,397.58 penalty on a MrBeast-affiliated editor who traded contracts using confidential information. A separate federal case involves an Army sergeant accused of using classified information to earn about $409,881 from Polymarket contracts linked to Venezuela operations. Kalshi has since introduced employer disclosure requirements for higher-risk markets and integrated with StarCompliance to monitor employee trading.
